Nigeria fine dials first loss for MTN

Firm spends R1.3bn in fees

CELLULAR giant MTN experienced a tough six months to June and reported that it spent R1.3 billion in professional fees muddling its way out of the Nigerian debacle.

The fine has since come to haunt its bottom line and the company reported headline losses of 271c a share in the six months to June – its first loss.

MTN agreed to pay $1.67bn (R22.83bn at Friday’s rate) over three years to the Nigerian government to settle the fine in June. The fine, which was originally $5.2bn, was imposed after it missed the deadline for disconnecting unregistered users in that country.

MTN said on Friday that the board had exercised its judgment and approved the quantum of professional fees taking into account global benchmarks and the value delivered in the final settlement of the fine.

Group executive chairman Phuthuma Nhleko said MTN had paid for the help from advisers and law firms in the US, South Africa and Nigeria to help settle the fine.

“We had a $5bn fine and it took us a good eight months to… settle it. In settling it, we had a wide range of advisers and lawyers from firms in the US, Nigeria and South Africa as well as lobbyists,” he said.

“You have to look at it in the context of the magnitude of the fine,” Nhleko added.

MTN was loss-making in the six months to June after grappling with the steep Nigerian regulatory fine, the depreciation of local currencies against the US dollar and liquidity constraints that impacted its ability to repatriate funds from Nigeria.

Nhleko said the half to June had been the toughest in the company since it was established in 1995. “The financial performance for the period reflects the confluence of a number of material issues, which created the perfect storm.”

Apart from the Nigerian regulatory fine, weaker local currencies against the dollar had a substantial impact on the group’s results. MTN reported R3.6bn in foreign exchange (forex) losses in the six months to June.

Impacted

Overall the group’s underlying performance was affected by weak macroeconomic conditions affecting consumer spending, the withdrawal of regulatory services in Nigeria between July last year and May this year and disconnections of subscribers related to subscriber registration